By Kannaki Deka
(Reuters) – Expedia shares rose more than 8 percent on Friday as markets cheered the online travel agency for beating quarterly profit estimates, even as it joined other travel companies in warning of weaker demand ahead.
Expedia (NASDAQ:) has benefited from a sustained rise in international travel as tourists flock to destinations in the Middle East and Europe, but expects demand to slow as high borrowing costs and sticky inflation stifle consumer spending.
Domestic travel in the United States has come under pressure since the beginning of the year as more Americans are hesitant to spend on travel amid an uncertain economic outlook.
“In response to the recent slowdown, EXPE has lowered its FY24 bookings guidance to 4% year-over-year, down from the prior mid- to high-single-digit guidance and represents the third consecutive guidance reduction,” Jefferies analysts said in a note.
Rival Booking (NASDAQ:) and short-term rental platform Airbnb are also among travel companies that have warned that consumers are waiting longer to book vacations and are becoming cautious about spending.
Piper Sandler analyst Thomas Champion attributed the stock's rise following the results to investors viewing the forecasts as conservative, while Jefferies analysts said they expected Expedia shares to rise “after disappointing ABNB/BKNG numbers dampened expectations.”
“We believe concerns over weak consumer spending could create a challenging environment for equities in the near term,” Morningstar analyst Dan Wasiolek said in a note to clients.
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